ACCA Applied Knowledge · Business and Technology · Political and legal factors affecting business
A government privatises a state-owned railway by selling it to private investors. Which outcome is most typically expected from this policy?
The most typical outcome is a stronger focus on profit and efficiency. Private owners answer to shareholders and seek returns, so the operator is run more commercially. Political control over fares usually falls, but regulation often remains and lower prices are not automatic.
- AA stronger focus on profit and efficiency in the operatorCorrect
- BGreater direct political control over fares
- CRemoval of all regulation of the industry
- DAutomatic reduction in prices for passengers
Explanation
Private owners seek returns for shareholders, so privatisation usually brings greater emphasis on profit and efficiency. Political control over fares generally falls, though regulation often remains for natural monopolies, and lower prices are not guaranteed.
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